OMAHA, Neb. (KMTV) — The City of Omaha is running into a hurdle on its streetcar project as the Metropolitan Utilities District said publicly this week that gas and water rates will go up if the city doesn’t help pay to replace lines along the streetcar route.
Senior Vice-President and General Counsel for MUD, Mark Mendenhall, told the Omaha City Council Tuesday that water rates will go up 18% and gas rates will rise 6%, if the city does not help pay for the majority of the replacement work.
Mendenhall said, in total, the cost would be $20 million to replace the lines along the urban core in Downtown and Midtown. MUD has offered to pay just over $4 million.
MUD cited its policy in its board meeting Wednesday, saying developers pay for the cost of the lines. In this case, the developer would be the City of Omaha.
“I’m not minimizing that this is an incredibly significant project for the city, but it’s akin to a subdivision. Developers pay for mains in subdivisions because you don’t know how long it’ll take to fill up,” said Joseph Schaffart, VP & CFO at MUD.
The city doesn’t appear to agree.
Mayor Jean Stothert’s office pointed out in a press release that MUD was already planning a rate increase. The Board of Directors did agree to a modest rate increase Wednesday, but less than what they say the streetcar would require.
Councilmember Vinny Palermo was adamant Tuesday that rates are increasing regardless of the streetcar project.
“Don’t take this the wrong way, with all due respect, I find it a little disingenuous that if you do this as a city, even if our rates are going up, they’re going to go up more because of you. That’s just not true.”
The city proposes that it pay $5 million, MUD pays $4.9, and the rest is paid off in bonds the city purchases and MUD pays off.
Board members and executives at MUD's meeting Thursday said it wasn’t adversarial, but acknowledged the situation developed into a public spat. The utility didn’t seem fond of upping rates, citing responsibility to its customers, which is largely the greater-Omaha area.
“This one I just don’t see it, I don’t see why they would expect us to pay that,” said Board Member Mike McGowan.
MUD said it replaces lines based on its risk model and the lines that the city needs for the streetcar don’t need repair yet. The utility did acknowledge that its risk model allows for some of the lines to be moved up in priority with a streetcar coming in.
Stothert’s office appeared to disagree, citing 73 main breaks in the urban core in the last five years.
Palermo also believed that MUD would make up the cost with the rise of residents expected to move to the urban core, but Mendenhall said they ran the numbers.
“The math doesn’t add up.”
In anews release late Wednesday afternoon, MUD said: "The District intends to work with the City of Omaha in a cooperative and transparent manner to minimize any additional financial burden to our customers."
RELATED: Omaha City Council debates streetcar funding on Tuesday
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